This week…

• The stock market was up on the week on improved earnings and stronger retail sales. The stocks appeared to ignore the problems in Europe. Words from Chairman Bernanke to “do more” if the US economy falters was also music to equities ears. In regaining 1,400 the S&P 500 was suggesting that new highs are possible. It is an election year and election years tend to be up years.

• US bonds were also up on the week with the problems in Europe (Spain downgrade, recession in Britain, 24.4% unemployment in Spain, possible Socialist President in France). Chairman Bernanke’s “do more” also helped bonds.

• Gold prices rose on the week as reports were out that central banks were strong buyers in March. As with stocks and bonds Chairman Bernanke’s “do more” helped spur gold prices higher. The gold stocks were also up on the week. Gold is up above $1,650 and above $1,670 gold looks better again for a run above $1,700. The commercial COT improved again. The US$ was weaker and breaks down under 78.

• Oil prices rose on the stronger earnings. Fed stimulus and a lower US dollar also helped oil prices. Oil prices seemed to ignore the problems in Europe and higher production from OPEC. Oil prices may be poised to break above $105.

D.C.

Chart of the Week – The TSX Energy Index/Oil ratio is showing extremes.

Stock of the Week – A leader for the TSX Energy Index?

Note: This weekend I have a lot on my plate so a shortened commentary will be produced.

D.C.

This week…

• The S&P 500 had a strong up day on Tuesday then managed to hold to those gains closing slightly higher on the week. The NASDAQ, however, fell slightly. Strong retail sales at the beginning of the week was offset by a spat of weaker economic numbers as the week moved on. April has thus far been weak but the markets remain up on the year. May is approaching with its old adage of “sell in May and go away”.

• US bonds rose this past week on ongoing concern over Europe (Spanish, Italian and French bonds were weak) and the weaker than expected economic numbers in the latter part of the week. Cdn bonds went in the opposite direction as while the monthly BofC rate decision was unchanged as expected BofC head Carney suggested that monetary stimulus could be withdrawn and that in turn hinted that rates could rise. Bond prices fell and the Cdn$ strengthened as a result.

• Gold was down but silver prices rose this past week. Copper and palladium prices were up on the week as well and the rise in copper prices could be encouraging for gold as gold often follows copper. Copper prices were up on a report from the IMF suggesting global growth is going well and they were encouraged by improvements in the US. The US$ Index fell this past week as it lost against the Euro and the Swiss Franc and British Pound. The Japanese Yen, however, was weak. Normally a weaker US$ takes gold higher. None of this stopped the gold stocks from falling and by week’s end they were holding just above the recent lows.

• Oil prices rose slightly and the energy stocks managed gains. But the reality is for the energy stocks they have been relatively weak compared to oil prices. This is similar to gold and the gold stocks. Possibly some of the reason is the extremely weak natural gas (NG) prices as that market hit new lows on the ongoing glut of gas. NG prices are barely above the lows of 2002.

• The TSX Composite was up on the week despite weakness from Golds, Materials and Metals.

D.C.

This week…

• The stock markets fell for the 2nd week in a row on fears of sovereign debt contagion in Europe, a slowing Chinese economy and follow through from the weak job numbers seen on Good Friday. But the last weekly low at 1,340 is still intact and objectives on what appears as a small double top on the charts was met this past week. Regaining 1,400 would be positive.

• Bonds rose for the same reasons the stock market fell. New highs are possible.

• Gold rose but was weak on Friday following weakness for Spanish bonds that sparked a rush into US bonds and the US Dollar. The US$ still appears to be forming a top and gold a bottom but the reality is until gold breaks above $1,700 at minimum and especially above $1,800 and the US$ falls below 78 and not take out 81/82 then risks for gold remains to the downside. The gold stocks recovered from the decline to new lows seen the previous week. The gold stocks are woefully weak and are at extreme lows when compared to the price of gold itself.

• Oil prices fell on global economic weakness (China, European concern over bond contagion and the weak US job numbers) but also because Iran and the US are talking and who knows they might even reacha deal. Sanctions are biting and that has brought the Iranians back to the table. But the real hurdle is the Republican held congress who even if Obama does get a deal the Republicans may jettison it because it is an election year and any success for the President must instead be seen as failure. Natural gas prices fell under $2 and new lows. It is the first time under $2 since 2002.

• The TSX Composite fell on the week but it was not because of golds and metals. Their rise prevented a potentially steeper drop in the composite.

D.C.

Chart of the Week – Gold stocks in a deep funk but there is a light.

Stock of the Week – Natural gas is in a deeper funk but one producer is showing signs of bottoming

D.C.

This week…

• The stock market faltered as the Fed indicated it may not be willing to provide more QE. But Friday’s job numbers caused the briefly open S&P 500 futures market to fall on Friday following release of the numbers.

• The bond market reacted positively to the lower than expected jobs numbers on Friday and rallied after being marginally weak earlier in the week. In Canada it was the opposite as the jobs numbers surprised and the bond market weakened as result on thoughts the BofC might hike interest rates sooner than later. With the Fed holding short rates at current levels until 2014 the odds of the BofC hiking rates any time soon are low to nil.

• Gold fell this past week as the FOMC minutes released on Tuesday indicated that further QE was off the table. The US$ rallied. But with the release of the lower than expected jobs numbers on Friday gold rallied in the cash market and the US$ faltered. A possible bottom head and shoulders pattern on gold is still in play as is a possible top head and shoulders pattern on the US$. The gold stocks were “awful” as they plunged to new lows for both the HUI and the TGD. Sentiment is at rock bottom and there are a number of positive divergences in both weekly and daily indicators. The HUI and the TGD have also fallen into a congestion zone from 2010 and they are trading at levels last seen when gold was trading at $1,200.

• Oil prices rebounded after faltering earlier in the week but natural gas prices fell to new lows. The NG market is quite depressing but oversupply should continue into the future.

• The TSX Index was down on the week but it was led lower by weakness in golds, energy, materials and metals.

D.C.

Chart of the Week – Stifel Nicolaus cycles.

Note: Stock of the Week will return next week.

D.C.

This week…

• The S&P 500 finishes its best first quarter since 1998 gaining almost 12%. The S&P 500 and the NASDAQ have made new highs above their 2007 highs. But the Dow Jones Industrials has yet to see new highs. A divergence? Key level is now at 1,370 as a possible rising wedge triangle appears to be forming. Cycles are mixed with some going straight up from here until fall with others topping in April. Potential objectives remain up to 1,550 and even 1,600.

• Bonds steadied this past week in the US but investors are switching to shorter maturities along the yield curve. Weaker economic numbers in Canada along with austerity budgets pushed Cdn bond prices higher this past week.

• Special section on the “Demise of the Penny” and what does it mean. In the Cdn bond section.

• Gold rose as the US$ faltered. The BRICs could be forming an alternative system for trade using their own local currencies. India, China and others continue to trade for oil with Iran using gold, local currencies and barter. But all of these events are another knock against the US$ as it faltered this past week. The gold stocks made new lows again but managed to crawl back to unchanged. They are showing signs of a bottom.

• Oil prices faltered as the western world announced they would release strategic reserves. But oil prices bounced back at week’s end. Is there any hope for natural gas prices as they plunged to new lows again.

• The TSX was down on the week as energy, metals and gold faltered.

Note: Next week is a long weekend and I am away part of the weekend. However, a short commentary will be produced.

D.C.